Multilateral Agency Status For International Solar Alliance By December
The International Solar Alliance — a brainchild of Indian Prime Minister Narendra Modi — will likely receive legal multilateral agency status later this year during the visit of French President Emmanuel Macron to India.
The idea of International Solar Alliance was put forward by India and France jointly during the COP22 meeting at Paris in 2015. The Alliance includes countries that lie between the tropics of Cancer and Capricorn; although other countries are also welcome to join. The aim of this Alliance is to reduce the cost of solar power and ensure a wider access to it. This would be achieved by various means including capacity building and technology innovation, among others.
The National Institute of Solar Energy, located at New Delhi, will serve as the secretariat of the Alliance. The French Development Agency has already committed €300 million for the operations of the Alliance. The focus will now shift towards getting funding from other financial institutions and private sector.
Last year, an official at India’s Ministry of New & Renewable Energy outlined the target to mobilize $1 trillion for the ISA. Details of this mobilization plans were revealed in the following months. According to media reports, the World Bank is likely to provide $30 billion per year for a period of 10 years. The World Bank would likely create a fund through the sales of financial instruments, possibly green bonds, and no direct contribution by members countries would be needed. This fund will work as the credit guarantee mechanism and will be used to tap loans from the private sector worth $300 billion.
Around $300 billion will likely come from the Green Energy Fund.
The ISA is also planning to tap Fortune 1000 companies for funding. It aims at $1 million contributions from these companies. All the contributions would be poured into an endowment fund with an annual yield of 8%. Only the interest from this fund will be spent, while the principal amount will remain untouched. The Indian Renewable Energy Development Agency and the Solar Energy Corporation of India (SECI) have made such contributions so far.
On the capacity building front, government agencies like the SECI will likely play a major role. These agencies can help new solar markets develop regulatory and institutional support on which market-linked mechanisms can operate. SECI is reportedly working on such an initiative for Asian and African countries.
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